Can the Bitcoin-driven public chain Core become the optimal solution for BTCFi?

Bitcoin has just celebrated its 15th “birthday” this year, and the fourth halving of its life cycle is also imminent. 92% of the total supply of 21 million tokens has been mined. At this historic moment, inscriptions, Bitcoin NFT Such “applications” have exploded in the market in the past six months, and the popularity of the Bitcoin smart contract ecology represented by Stacks has also been rekindled. For the current Bitcoin, DeFi is a link that is relatively lacking but has the greatest room for imagination.

People are still looking for an optimal solution that can fully inherit the security of Bitcoin and at the same time create a Bitcoin ecological decentralized finance (BTCFi). This article will introduce the BTCFi solution provided by the public chain Core.

What is Core chain?

Core Chain is an EVM-compatible Layer 1 blockchain powered by Bitcoin. “Bitcoin-powered” is the key feature that allows Core Chain to inherit the security of the Bitcoin network, and this is reflected in the consensus mechanism of Core Chain.

The consensus mechanism of the Core chain combines Bitcoin’s PoW. Specifically, Core’s 21 validating nodes are selected through a hybrid scoring system, which includes the size of Bitcoin’s computational power staked on the validating nodes and the amount of Core chain’s native token, CORE, staked. There are plans to include Bitcoin staking as one of the criteria for node scoring in the future.

Can it become the optimal solution for BTCFi?

As a newcomer in the BTCFi field, whether the Core chain can become the optimal solution has yet to be verified by the market. However, the Bitcoin PoW consensus mechanism it adopts and the Bitcoin staking that will be launched undoubtedly provide a strong guarantee for its security and decentralization features. support.

The consensus mechanism of the Core chain is based on Bitcoin PoW

The biggest difference between the Core Chain and other current Bitcoin ecosystem projects is that Core chain directly uses Bitcoin’s Proof of Work (PoW) as its consensus mechanism. Bitcoin’s PoW consensus is currently the most secure and decentralized accounting mechanism that has been verified over time. Therefore, Core Chain incorporates Bitcoin’s PoW mechanism as part of its consensus, providing a secure “protective shell” for Core Chain while ensuring the security and decentralization of Bitcoin.

For Bitcoin miners, the consensus mechanism of the Core chain also provides an option to earn profits without increasing additional energy and time costs, offering diversified income possibilities for miners even as Bitcoin rewards continue to decrease.

According to the official website of the Core chain, the current computing power delegated to the validation nodes on the Core chain is 218.32 EH/s, accounting for 35% of the total Bitcoin computing power of 611.3 EH/s. This number even reached 40% in August 2023, as reported@core_dao/40-of-bitcoin-hash-power-is-now-securing-the-core-network-578f8d0b1e82"> here. Major exchanges such as Huobi, OKX, Bitget have joined the Core chain as validation nodes to jointly ensure its secure operation.

Bitcoin staking will be launched in Q2 of 2024

Incorporating Bitcoin’s PoW, the Core chain will introduce Bitcoin staking in its consensus mechanism in Q2 of this year. This means that the validation node score of the Core chain will include three weighted factors: Bitcoin hash power, staked CORE tokens, and staked Bitcoin.

Bitcoin is currently the highest market value and strongest consensus cryptographic asset. By introducing Bitcoin staking in the Core chain, and combining it with the underlying Bitcoin PoW to maintain decentralization and security of the public chain, the Core chain has immense potential to unleash the prosperity of BTCFi.

For Bitcoin holders/investors, the new Bitcoin staking feature of the Core chain will also be a new and competitive investment option. This is because the Bitcoin staking process in the Core chain is non-custodial, making it more secure compared to some centralized custodial institutions. The participation of Bitcoin stakers will usher in a BTC 2.0 era, allowing Bitcoin stakers, Bitcoin hash power stakers, and CORE stakers to continuously earn rewards and form a mutually positive incentive economic cycle.

At this point, the introduction to the Core consensus mechanism is complete. Core is a public chain that is both EVM compatible and fully inherits the security of Bitcoin. It has the potential to develop Bitcoin DeFi and provide infrastructure for existing DeFi projects to migrate to Core and build the Bitcoin DeFi ecosystem.

Introducing stCORE and laying out BTC DeFi

Liquid staking is currently the highest TVL sector in the DeFi field, and it is simpler and can enhance the utility of tokens compared to more complex DeFi activities. Therefore, Core’s initial exploration in Bitcoin DeFi has focused on liquid staking strategies. Core recently announced the launch of the liquid staking token stCORE to solve the problem of previously untradeable tokens after staking CORE. Users who stake CORE will receive an equivalent amount of stCORE, which can be traded, sold, or used in other DeFi protocols while CORE is staked, enhancing user liquidity.

In addition, Core’s 2024 Bitcoin staking roadmap shows that it will also introduce Wrapped BTC minted and locked on the Core chain, native BTC staking on the Core chain, and incentives for Wrapped BTC, enhancing the utility of Bitcoin on the Core chain.

Core team and background

After having an in-depth grasp of the consensus mechanism of the Core chain and its vision of building a Bitcoin DeFi ecosystem, understanding the team and organization behind it can also allow us to further understand Core. L1 public chain Core is operated by the decentralized organization Core DAO, which currently has more than 45 members around the world. Among them, core contributor Rich Rines has three years of experience at Coinbase and is the chief engineer responsible for capital flow. Other members of the team also come from well-known large institutions in the industry and hold high-level positions, including Blockchain.com, MoonPay, BNB Chain, etc.

The Core DAO contributor team has a strong background, and their operational effectiveness is also reflected in social media data. On the X (formerly Twitter) platform, the number of Core DAO followers has exceeded 2.1 million, and the number of Discord community members has exceeded 250,000 , indicating that it has a large community base.

Core Token CORE

Token CORE is the utility and governance token of the Core chain. It can be used to pay gas fees for transactions, stake on the Core network and participate in network governance. It was launched in February 2023 with a total supply of 2.1 billion. Total supply in its token economic model:

• 39.995% (approximately 840 million coins) are used for node mining rewards;
• 25.029% (approximately 525 million coins) are used for user rewards;
• 15% (approximately 315 million coins) are distributed to project contributors;
• 10% (approximately 210 million coins) are used as reserves;
• 9.5% (approximately 200 million coins) are allocated to the treasury to support the development of the Core chain’s ecosystem;
• 0.476% (about 10 million) is used for relay node rewards.

According to the allocation model mentioned above, it can be seen that the CORE token is primarily allocated to node mining. 39.995% of the node rewards will be distributed over a period of approximately 81 years, with block rewards decreasing by 3.6% annually.

Conclusion

All the features of the Core chain are built around the establishment of the BTCFi ecosystem, including its innovative consensus mechanism that combines PoW, a large user base, and compatibility with EVM. In 2024, Core will complement and improve the Bitcoin DeFi ecosystem through these features. At the same time, Bitcoin’s robust network and high security will support the stable and secure operation of the Core chain, creating a mutually reinforcing and evolving relationship.

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